How To Maintain Proper Asset Allocation With Multiple Investing Accounts

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For example, if you were looking at your portfolio like I did last year, you would have noticed that your large cap U.S. stocks outperformed most other investments in your portfolio. As a result, you could be really out of whack in that sector this year. You may not think it matters – don’t sell your winners – right? Well, what happens if the U.S. stock market corrects 10% this year? Then, instead of locking in gains, your new 51% of your portfolio would take a larger hit than necessary.

That’s why asset allocation is key!

Why Most Investors Fail At Asset Allocation

But I bet you – even if you are diligent about selecting a proper asset allocation – you are still failing at maintaining a truly balanced portfolio. The problem? Multiple investment accounts. The truth is, over time, most investors simply build up multiple investing accounts, and so true total portfolio asset allocation becomes difficult.

Now tell me this – are you really maintaining a solid asset allocation across all of these random accounts? Probably not.

But let’s fix that right now.

Using Free Tools To Help

There are two free things that you can do right now to help. I’ve done both, and I’ll share which one I prefer.

Setting Up an Excel Spreadsheet

First, you can use Excel. Typically, if I’m helping someone put together the asset allocation for their portfolio, I’ll use an Excel spreadsheet to balance out the various accounts. I was recently helping a family member, and they had a traditional brokerage account, 2 traditional IRAs (one for each spouse), 2 Roth IRAs, a pension for each of them that they would need to roll over, and then the basic checking and savings accounts. It can be daunting.

The trouble with this method is that mutual funds and ETFs can sometimes be hard to dissect. You really have to dig in and figure out what the allocation is, because many mutual funds and ETFs are a mixed bag. You’ll see in my spreadsheet how I split this up.

Using Personal Capital For Your Accounts

The method I prefer is to use a free program like Personal Capital (you can also use Mint, but it’s not as powerful). Personal Capital automatically connects all your accounts into one simple dashboard, and it then sets up what your current asset allocation is automatically. Then, it displays everything in a simple, easy to read dashboard:

From here, you can then look at modifying your portfolio to get to your target asset allocation. The only drawbacks of Personal Capital are that you cannot assign asset classes to investments (that’s where the unclassified sections comes from), and you cannot easily setup a target asset allocation. But Personal Capital is free, and it does this painlessly for you.

Using Paid Tools To Help

If using Personal Capital isn’t enough for you, there are paid tools that can help you. My favorite paid tool is Quicken, which you can use to manage all of your accounts and money in one simple place.

Quicken makes up for everything that Personal Capital doesn’t have – you can assign investments to asset classes, and it allows you to setup your personalized asset allocation. Then, it quickly shows you what positions you need to reduce and where you need to add – so that you don’t have to do any guess work on your own. It even offers you suggestions on where you can improve your holdings as well:

Now, you can quickly see where you need to rebalance your portfolio and do it in the right way. There is also a calculator available that shows you the specific dollar amounts you need to change – so when it comes time to actually make the trades, you know what you need to sell and what you need to buy.

Final Thoughts

It’s essential that you rebalance your portfolio – I recommend yearly, and use tax season as the prime time to do it so that you don’t forget. It can be easy to forget to rebalance your portfolio, especially after a solid year of gains that make you feel a bit flusher. But, if you don’t want to be poorer this fall, you need to rebalance now!

Filed Under: InvestingTagged With: Asset Allocation, Portfolio Asset AllocationEditorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, or other advertiser and have not been reviewed, approved or otherwise endorsed by any of these entities.

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About Robert Farrington

Robert Farrington is America's Millennial Money Expert, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.

One of his favorite tools is Personal Capital, which enables him to manage his finances in just 15-minutes each month. Best of all - it's free!

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a mix of properties through Fundrise. Worth a look if you're looking for a low dollar way to invest in real estate.

Hey guys,
I’m thinking about creating an app for this exact problem and wondering if you guys think its a good idea or not…
It would be similar to the spreadsheet above where you would add all your accounts, asset classes and desired allocations (only easier because it wouldn’t be a spreadsheet). It would then track the performance of the portfolio over time and show you how to rebalance things or make new contributions.
I feel like the tools above still haven’t made this easy enough…
Thoughts? Would anyone use this??